Notes to the Financial Statements

Corporate Information

Nu-Oil and Gas Plc (the 'Company' and together with its subsidiaries, the 'Group') is a company incorporated in England on 13 September 2007 and has registered address of Audley House, 13 Palace Street, London, SW1E 5HX.� The Group is domiciled in the UK for tax purposes and its shares are quoted on the Alternative Investments Market ('AIM') of the London Stock Exchange.

The Company is designated as an AIM Rule 15 Cash Shell.

1.�� Basis of Preparation

The consolidated financial statements of the Group and the financial statements of the parent Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), the Companies Act 2006 that applies to companies reporting under IFRS, and IFRS-IC interpretations.� The consolidated financial statements have been prepared under the historical cost convention.� The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.� It also requires management to exercise its judgement in the process of applying the Group's accounting policies.� The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 2.

Changes in accounting principles and adoption of new and revised standards

In the year ended 30 June 2020, the Directors have reviewed all the new and revised Standards.� The only relevant new standard that is effective for this year's financial statements is IFRS 16 'Leases'.� This standard does not have a material impact on the financial statements.� Furthermore, at the reporting date, the Group's only lease arrangement is for a period of 12 months.� Consequently, the Group intends to use the exemptions provided by the accounting standards for short-term leases (less than a year).

There are no standards in issue but not yet effective which could have a material impact on the financial statements.

Going concern

The Directors judge it appropriate to adopt the going concern basis in preparing the Consolidated and Company Financial Statements.�

In forming this judgement, the Directors reviewed the Group's funding, budget and business plan for the twelve months from signing the financial statements.� The Directors have relied upon the critical assumption that the Group will be able to achieve the key milestones of the business plan, notably with regard to securing an acquisition or acquisitions which will constitute a reverse takeover, which they believe will result in the availability of adequate additional funding.

The Directors have concluded that to the extent that these assumptions are not valid, there exists a material uncertainty that casts significant doubt upon the Group's and the Company's ability to continue as a going concern.�

Nevertheless, having stress-tested several forecast scenario assumptions and based on the knowledge that the Company is actively in negotiations with several targets, the Company is now assessing the implications of such acquisitions under AIM Rules.� The Company has until 4 May 2021 to complete an acquisition which will constitute a reverse takeover, failing which the Company's admission to AIM could be cancelled, should this occur there would be no external market for shareholders to trade their shares in the Company.����

The Directors therefore consider the assumptions as valid and consequently continue to adopt the going concern basis in preparing the financial statements.

Basis of consolidation

The Group applies the acquisition method to account for business combinations.� The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group.� The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.� Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.� The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.

Subsidiaries are all entities (including structured entities) over which the Group has control.� The Group controls an entity when the Group has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.�

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.� They are de-consolidated from the date that control ceases.

Inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated.� Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated.� Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.� Investments in associates are accounted for using the equity method of accounting.� Under the equity method, the investment is initially recognised at cost, and the carrying value is increased or decreased to recognise the investor's share of the change in net assets of the investee after the date of acquisition.

The Group's share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment.� When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.� Distributions received from an associate reduce the carrying amount of the investment.

The Group formerly held a 50% interest in the Marginal Field Development (MFDevCo) Ltd.� The Directors deem that the Group had significant influence but not control over this entity.� In accordance with IAS 28 this investment was accounted for using the equity method of accounting.� At the year end the investment balance is held at �nil following the reorganisation approved by shareholders in November 2019, MFDevCo has been disposed.�

2.�� Significant Accounting Policies

The principal accounting policies have been applied consistently throughout the year.

Segment Reporting

IFRS 8 Operating Segments requires that the segments should be reported on the same basis as the internal reporting information that is provided to the chief operating decision-maker.� The Group adopts this policy and the chief operating decision-maker has been identified as the Board of Directors of the Company.

Accounting policies

In historical periods, the focus in the Oil and Gas industry has given rise to it implementing several industry specific accounting policies relating to, interalia, oil and gas properties, intangible capitalised development costs and licenses.� Following the divestment of its interests in MFDevCo and EOI these policies are no longer relevant.�

Fixtures and fittings, equipment

Office furniture, fittings and equipment is stated at cost less accumulated depreciation and any impairment losses.� The initial cost of an asset comprises its purchase price, any costs directly attributable to bringing the asset into operation, the initial estimate of any decommissioning obligation, if any, and, for qualifying assets, borrowing costs.

Office furniture, fittings and equipment is depreciated on a straight-line basis over its expected useful life.� The useful life of the Company's office furniture, fittings and equipment is as follows:

Other long-term assets

Long term assets usually in the form of deposits or investments, are recognised initially at fair value and subsequently measured at amortised cost less any provisions for impairment.� A provision for impairment is established when there is objective evidence that the Company will not benefit from cash flows of an amount at least equal to the carrying value of the asset.

Government grant

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. Grants received in the period were for the Coronavirus Job retention scheme and are included in other income. There are no unfulfilled conditions or other contingencies attaching to these grants. The group did not benefit directly from any other forms of government assistance. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.�

Financial instruments

Financial assets

All of the Group's financial assets are held within a business model whose objective is to collect contractual cash flows which are solely payments of principals and interest and therefore classified as subsequently measured at amortised cost.� The Group's and Company's financial assets include cash and cash equivalents and trade and other receivables.

The Group assesses, on a forward-looking basis, any expected credit loss, defined as the difference between the contractual cash flows and the cash flows that are expected to be received.

Financial liabilities and equity

Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions, in accordance with IAS 32:
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������ They include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and
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������ Where the instrument will or may be settled in the Group's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Group's own equity instruments or is a derivative that will be settled by the Group exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the financial instrument is classified as a financial liability.

As such, financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.� An equity instrument is any contract that evidences a residual interest of the assets of the Group after deducting all of its liabilities.

Borrowings

Borrowings are recognised initially at the fair value of the proceeds received which is determined using a discount rate which reflects the cost of borrowing to the Group. In subsequent periods borrowings are recognised at amortised costs, using an effective interest rate method. Any difference between the fair value of the proceeds costs and the redemption amount is recognised as a finance cost over the period of the borrowings.

The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders' equity, net of income tax effects.

Trade and other payables

Trade payables are non-interest bearing and are stated initially at fair value and then amortised cost.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Employee Benefit Trust

The Group has closed the Employee Benefit Trust as it had expired by the reporting date.� Prior to its closure, the assets and liabilities of the Employee Benefit Trust were brought onto the Statement of Financial Position of the Company.� Shares held by the trust were consolidated as a deduction from equity.� This policy applied to both the Company and the Group.

Performance Share Plan costs

The fair value of awards granted is recognised as an employee expense with a corresponding increase in equity.� The fair value is measured at grant date, using an appropriate pricing model taking into account the terms and conditions upon which the award was granted, and is spread over the period during which the awards vest.� The amount recognised as an expense is adjusted to reflect the actual number of share awards that vest in the same period.� At each reporting date, the Company revises its estimates of the number of options that are expected to vest.� The Company recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

Foreign currency translation

The Company's functional currency is sterling.� Both Enegi Oil Inc. and Enegi Finance Limited (both subsidiaries at the prior year's reporting date) had a functional currency in Canadian dollars.� The Group's presentation currency is sterling.

In preparing the financial statements of the individual companies, transactions in foreign currencies other than the functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.� At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date.

Exchange rate differences arising on the settlement of monetary items and on the retranslation of monetary items are included in profit or loss for the period.� Exchange rate differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity.� For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

On consolidation, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the reporting date.� Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the rate at the date of the transaction is used.

Exchange differences that arise on long term intra-Group loans are recognised in the income statement in the individual financial statements of each Group company.

Income taxes

Current income tax assets and liabilities for the current and prior period are measured at the amount expected to be recovered from or paid to the taxation authorities.� The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Share capital

Issued share capital is recorded in the Statement of Financial Position at nominal value with any premium at the date of issue being credited to the share premium account.

Share-based transactions

From time to time, the Company may pay for goods or services through the issue of new shares.� The cost of such equity-settled transactions is recognised in the income statement, together with a corresponding increase in equity, in the period during which the goods or services are received.

The value of such share based payments is measured by reference to the fair value of the goods or services received or the market value of the shares issued, whichever value is more readily determinable.

Warrants

From time to time, the Company may issue warrants to suppliers as partial payment for goods or services or to investors or advisers in relation to the raising of new equity finance.� When warrants are issued as partial payment for goods or services related to operations, the fair value of those warrants is recognised as a cost in the income statement.� When warrants are issued in relation to the raising of new equity finance, the fair value of those warrants is set off against share premium.� Warrants issued but not exercised are held in a warrant reserve within equity.

Investment in subsidiary undertakings

Investments in subsidiary undertakings are recorded at cost plus incidental expenses less any provision for impairment.� Impairment reviews are performed by the Directors when there has been an indication of potential impairment.

Critical accounting judgements and estimates in applying the Group's accounting policies

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements and estimates that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period.� Actual results could differ from those estimates.� In the process of applying the Group's accounting policies, management have made the following estimates that may have a significant effect on the amounts recognised in the financial statements:

Estimates and Judgements

Going Concern: The financial information has been prepared assuming the Group will continue as a going concern.� The basis to which the Directors have formed this critical accounting judgement is further outlined in note 1 of the Group's accounts.